Thursday, June 30, 2016

According to the Washington
Post, Donald Trump's
pledges in connection with Trump University, Trump Vodka, his reality TV show,
and other ventures could have yielded $8.5 million in gifts over the past 15
years.

Other than Mr. Trump's $1 million gift last month to a veterans charity,
the newspaper was able to document one direct donation from the
mogul-turned-politician since 2008 — a contribution of $5,000 to $9,999 to
the Police Athletic League of New York City.

Monday, June 20, 2016

While chief executive
officer for 24 years of the Community Action of Minneapolis and earning a
salary of $180,000 plus bonuses and other allowances, he was indicted on chargeshe used taxpayer grants on lavish trips, personal purchases
and political activity. He pleaded guilty in federal court..

“Bill Davis stole from those in need to line
his own pockets. The evidence of fraud was overwhelming, and the defendant’s
guilty plea to all of the charges against him is a just result,” said U.S.
Attorney Andy Luge.

His son, Jordan, is a Minneapolis police officer. Jordan
Davis is also charged and is scheduled to go to trial.

Community Action's mission was to
provide poor residents with heating and nutrition assistance. But it was
shuttered not long after the allegations against Davis became public in a
scathing state audit.

The IRS Advisory Committee on Tax Exempt and
Government Entities, warns that a lack of funding, loss of institutional
memory, and a change in oversight strategy could render the agency toothless. The
report bemoans the IRS’s "stark shift" from regulating tax-exempt
organizations to a "nearly exclusive focus on tax administration."

The report states that the agency does not put enough effort
into auditing the new forms, thus diminishing its roleas a gatekeeper.

The study also
criticized changes in the advisory committee’s focus.Instead of delving into regulatory
issues related to those subject areas, the committee will focus exclusively on
tax processing tax documents more efficiently.

Thursday, June 16, 2016

Apparently members of Congress think
that the American Red Cross lied to them.

Let’s see what they will do!

POLITICO reports on a blistering Senate report on the American Red Cross raises fundamental questions
about the integrity of the country’s most storied charity and its stewardship
of donors’ dollars.

The report, which was released today by Sen.
Charles Grassley, R-Iowa, and contains nearly 300 pages of supporting
documents, found:

·After the 2010 Haiti earthquake, the Red Cross spent tens ofmillions
of dollars more than it has previously acknowledged on internal expenses. The
Red Cross told Grassley that the money was largely spent on oversight to make
sure the Haiti aid was used properly. But Grassley’s office found that the
charity “is unable to provide any financial evidence that oversight activities
in fact occurred."

·McGovern and her subordinates have kept the charity’s own internal
investigations and ethics unit “severely undermanned and underfunded.” The
charity is “reluctant to support the very unit that is designed to police
wrongdoing within the organization.”

There are “substantial and fundamental concerns
about (the Red Cross) as an organization,” the report concludes.

Grassley launched his investigation following
stories by ProPublica and NPR onRed Cross failuresin providing disaster relief, including afterthe Haiti earthquake. The group
raised nearly half a billion dollars after the disaster, more than any other
nonprofit. But our reporting found that, for example, an ambitious plan to
build housing resulted in just six
permanent homes.

Red Cross
officials, including McGovern, have repeatedly told the public that the charity
retains 9 percent of donations to cover management and administrative costs.
But Grassley found that a full 25 percent of donations — or around $125 million
— were spent on fundraising and management, a contingency fund, and a vague,
catchall category the Red Cross calls “program costs.”

On top of
that 25 percent, the Red Cross sent the bulk of the donated money to other
nonprofits to do the work on the ground. Those other nonprofits then took their
own cuts for overhead costs — as much as 11 percent.

Pressed by Grassley’s investigators, the Red Cross could not
give an accounting of the oversight it says it did with the money from the
Haitian relief. After repeated requests by Grassley’s investigators over the
course of months, the Red Cross finally last month produced a documentwith a narrative description of oversight but no financial
details.

In general, the Red Cross itself doesn’t know
how much money it spent on each project in Haiti because of a “complex, yet
inaccurate” accounting system, the report found.

The report concludes that the Office of
Investigations, Compliance, and Ethics was left so under-resourced that it is
“unable to perform its primary function; namely, to perform investigations,
ensure compliance, and maintain ethical standards.”

The report echoes confidential findings made
by consultants hired by the Red Cross, which were previously reported by
ProPublica and NPR.

Friday, June 10, 2016

exposing the crisis in nonprofit
fraud leadership…a crisis of pervasive and monumental waste, fraud, abuse,
mismanagement, and malfeasance throughout the charitable sector which
costs taxpayers and contributors tens of billions of dollars annually;
and,

seeking reforms that will restore
the public’s lost confidence in the sector.

What’s Included:

Skunk of the Month:

Wounded Warrior Project:
May Smith Trust…more

Breaking
the Silence:

American Red Cross

Charity Check Up:

Hindu Temple

A Thought or Two:

Principle
For Charities To Live By

Nonprofit News-In Case You Missed It:

Healing Arts Initiative;
Donald Trump Charities…more

Political/Official Chicanery:

MI CA; ME; AK; RI…more

What Do You
Think?

·To do good, donors must do their homework

·Give without being taken

In spite of what the
Independent Sector has said for decades:…”(the charitable sector) doesn’t have
one center of organization and imagination looking out at the far horizon to
inspire and guide all of the component parts to get to a place together that
none operating independently could ever get to on its own. It doesn’t have one
voice to tell the rest of the world where it is headed and what it requires to
get there. It has no coordinated analytical capability to help it understand
its progress.” (Harvard Business Review)

--------------------------------

"Board members of the city’s nonprofits must take
more responsibility and become better stewards of their organizations, says a
new report released, the second self-examination of the sector to come out in
the past month, a recently released report from
the Human Services Council said.”

---------------------------------

Skunk of the Month…

“They came to
do good and they did very well indeed (for themselves).”

Skunk of the Month is the twice-monthly designation
made by Nonprofit Imperative, the
organization dedicated to eliminating waste, fraud, abuse and mismanagement in
nonprofits and government. The Skunk of the Month award is given to
charities and government officials who show blatant disregard for the interests
and trust of contributors and taxpayers. This month’s example is:

More Congressional Talk…awaiting action

To his credit, Senator
Chuck Grassley has brought to the public’s attention many abuses in the charitable
sector.

But change, in the past,
has not been readily forthcoming (ie, American Red Cross, Smithsonian)

Now,Grassley and the Senate Judiciary Committee have been looking
into the spending at the Wounded Warrior Project, specifically trying to make
sense of the proportion of spending on veterans programs against the total
budget.

The
committee questioned even the services themselves: “It appears the vast
majority of the 94 percent of program services provided to veterans consisted
of tickets to sporting events,” Grassley said in the letter. Grassley further
questioned the characterization of placing $37 million over 2013 and 2014 into
a trust fund as a program expense.

The
senator finally ventured that, “Of the $242 million WWP spent on program
expenses in FY 2014, it appears that approximately $150 million of it was not
actually spent on veterans by WWP and a large portion of it was in-kind
donations.”

The
Grassley letter concluded with a set of further questions to be completed by
June 1st, including a request for the independent review of spending
practices commissioned by the board and copies of the fundraising materials
against which the joint cost allocations were made.

Lets hope that the WWP
response fully addresses the questions and that the committee concerns don’t
get lost in the daily Finance Committee charge.

Update from recent Grassley email: Based on WWP's Consolidated Financial Statements, you claim
that 80.6% of its total expenditures went to provide services for veterans.
That includes free media as a program service to veterans as well as
$40,916,885 on program service costs that were joint educational and
fundraising solicitations. It is questionable “if these solicitations
provide any benefit to veterans or provide direct support to WWP's mission.”
Aside from attending sporting events, only a little amount was spent on program
events that were Physical Health & Wellness. In total, when taking the
aforementioned into account, of the $242 million WWP spent on program expenses
in FY 2014, it appears that approximately $150 million of it was not actually
spent on veterans by WWP and a large portion of it was in-kind donations.

A Grassley victory: Sen. Chuck Grassley of Iowa released
the results of his 16-month-long inquiry into a Missouri non-profit hospital in
the spotlight for aggressively suing low-income patients. Thanks to Grassley’s
inquiry and persistence, Mosaic Life-Care approved debt forgiveness for 5,070
patients totaling $16.9 million. “Tax-exempt hospitals cannot be in business to
profit off of poor people who may not know what form to file,” Grassley said in
a speech on the Senate floor in announcing the results. “That is not what
Congress intended to happen when we created the tax exemption. Now,
thousands of people have a new lease on life, thanks to Mosaic’s meeting its
tax-exempt responsibilities.

Trustee Raids Charitable Trust For $52 million

A former trustee for two charitable trusts was
sentenced to 13-plus years in jail for spending $52 million of one of the
organizations’ funds on aircraft, boats, and personal expenses over six months
in the mid-2000s,The Boston Globewrite. He used May Smith Trust money for a spending spree
that included purchases of private jets, military planes and helicopters, a
patrol boat, a yacht, and a $700,000 home. He was convicted in February on 11
felony counts in what federal prosecutors said was one of the largest cases of financial
fraud in Alaska history. Philanthropy experts told the Globe inherited trusteeships
remain commonplace.

Congressman Jones is “outraged
that Mr. Burch receives a taxpayer-funded salary from the VA and drives a Rolls
Royce to work while cheating veterans out of their money and the services he
promises them. In 2014 he drew a salary of $65,000 as
head of his "zero-star" charity while pulling down $127,000 in salary
in 2014 VA Deputy Director.

According to Charity Navigator,
they don't have an independent board of directors, they actually don't even
have a comprehensive board of directors -- only three members on the board at
this point in time and some of them are family. (CNN)

Add Two Celebrities To The Charity Fraud List

Former NBA player Kermit Washington—who had a
10-year career primarily with the Lakers and Trail Blazers but is best known
forbrutally
punching Rudy Tomjanovich in the face—wasarrestedafter
beingindictedfor
allegedly running a charity fraud scheme. According to the Department of
Justice, Washington worked with lawyer and NFL Hall of Famer Ron Mix (whoplead guiltyto felony tax fraud charges) to siphon
money supposedly destined for Africa into his own pocket. If convicted, he faces over 40 years in prison and
a million dollar fine.

Breaking the Silence:

Red Cross Botched
Response To Mississippi Flood

“There wasn’t any coordination.” They
were in the wrong place.
Red Cross’ response was “marginal at best” at the Mississippi flooding.“The problem is their inability to develop
tactical plans for their relief operations.”
It has been extensively reported that the Red Cross ’botched responses to Superstorm Sandy in 2012 and its failure to follow through on promises after the 2010
earthquake in Haiti.
The Mississippi emails also show the effects of deep cuts to the charity’s network of local chapters
made by CEO Gail McGovern, who has struggled to get the Red Cross on stable
financial footing since she took over the charity in 2008. The Red Cross closed
several Mississippi chapters since McGovern became CEO. The downsizing hasn’t
been limited to local offices. Last month, a Red Cross senior vice president
sent an email informing his staff that positions in the Disaster Cycle
Services would be cut.
Mississippi emergency management officials said the state has suffered from the
Red Cross’ cutbacks. (Source)

Further
update: Rep. Bennie Thompson,
D-Miss., the ranking member of the congressional committee that oversees the
Red Cross, sent a three-pageletterto the charity’s CEO
demanding that she explain why the Red Cross struggled to respond to record
flooding in Mississippi this spring. Thompson pressed Red Cross CEO Gail
McGovern for details on the impact of its staffing cuts and how it plans to
coordinate better with state emergency managers. (propublica.org)

Charity Check Up:

Hindu Temple Hit With Embezzlement

He led major
renovations of a Flint-area (MI) Hindu temple and embezzled more than $400,000
while he was its director, according to authorities. Investigations revealed
that the director was writing checks to himself and his businesses from the
temple's account. He said his investigation into temple finances only went back
six years due to the statute of limitations. He was the primary person in
charge of temple finances

The executive also has another case open in Genesee County Circuit Court, where last
year he pleaded no contest to two charges stemming from writing bad checks. A
no contest plea is not an admission of guilt, but is treated as such for the
purposes of sentencing. Sentencing in that case is pending a resolution in the
embezzlement and larceny case, court records show. (source)

A Thought or Two:

RAY DALIO at Bridgewater Associates shares some
thoughtful fundamental life principles that are certainly applicable to today’s
charitable environment. We will present one principle each newsletter. (principles)

Have
integrity and demand it from others. a) Never say anything about a person you
wouldn’t say to them directly, and don’t try people without accusing them to
their face. b) Don’t let “loyalty” stand in the way of truth and openness.

1.Healing Arts
Initiative—a Queens-based charity that provided performances and workshops for
over 300,000 poor, disabled, and elderly New Yorkers—shut its doors after it
failed to regain its footing from the discovery of a $750,000 embezzlement. Shortly after being hired last summer, the director, D.
Alexandra Dyer, was disfigured in an attack that led to three arrests and the
exposure of what prosecutors said was a $750,000 embezzlement scheme. In April,
Ms. Dyer sued the board on behalf of the charity itself, claiming that the
board’s negligence had enabled the thefts. Last week,the board fired Ms. Dyerand her chief financial officer, Frank Williams. The board
said through a spokesman, Timothy Gilles, that expenses for program, payroll
and administration had exceeded revenue for many months but that the board did
not know the extent of the problem until this week because Ms. Dyer and Mr.
Williams had withheld “crucial financial information.” Ms. Dyer and Mr.
Williams said that they supplied all possible information and that the board
ignored complaints about malfeasance for years.

2.In January, Donald Trump
skipped a GOP debate and instead held his own televised fundraiser for
veterans. At the end of thenight, Trump proclaimed it a huge success: “We
just cracked $6 million, right? Six million. ”Now, Trump’s campaign says
that number is incorrect. Campaign manager Corey Lewandowski said the
fundraiser actually netted about $4.5 million, or 75 percent of the
total that Trump announced. Lewandowski blamed the shortfall on Trump’s own
wealthy acquaintances. He said some of them had promised big donations that
Trump was counting on when he said he had raised $6 million. But Lewandowski
said those donors backed out and gave nothing.

Update: Almost four months after promising $1 million of
his own money to veterans’ causes, Donald Trump moved to fulfill that pledge —
promising the entire sum to a single charity as he came under intense media
scrutiny.

Another update: Florida Attorney General
solicited a donation from Trump around the same time her office deliberated joining an
investigation of alleged fraud at Trump University and its affiliates. The
$25,000 donation came from a Trump Foundation apparently in violation of rules
surrounding political activities by charities. (source) In a strange
twist, the AG says se tried to return the money but Trump would not accept it. “They rejected it and sent it back.”

3.The Annual Fraud Indicator 2016estimates that the cost of fraud affecting the
voluntary sector was £1.86bn ($2.7bn) in 2013/14, or 2.5 per cent of the
sector’s annual income and expenditure in the U.K.. In the U.S., it is at least
three times that percentage. And guess what, no one cares!

4.An
early-childhood-education nonprofit headed by Diana Rauner, the wife of
Illinois Gov. Bruce Rauner, has joined a coalition of charities suing her
husband and several members of his administration over failure to pay off state
human-service contracts, according to Crain’s Chicago Business.

5.Fighting charity fraud
could become more difficult under a bill that, if it becomes law, would
prohibit theInternal Revenue Servicefrom collecting the names of top
donors to charities and other nonprofit groups,Reutersreports.
Currently under consideration in the House of Representatives, the bill would
protect the privacy of wealthy donors who make anonymous gifts to politically
active groups and eliminate a decades-old IRS donor-disclosure requirement for
a range of organizations, including hospitals, universities, and community and
sports organizations. Critics of the proposal argue that it
would negatively affect state regulators, who sometimes review charities'
Schedule B forms for conflicts of interest, questionable movements of money,
and in-kind donations between charities. "It's important forensic data to
us state regulators," Hugh Jones, deputy state attorney general in
Hawai'i, told Reuters. "It's evidence we can consider using in an
investigation to determine whether a charity’s board has breached its fiduciary
duty."

6.Charity Navigator, a
charity-rating website is changing the way it rates nonprofit groups, saying
the new method gives donors a better picture of how a particular charity
performs over time. Charity Navigator, which rates charities on a zero- to
four-star scale, will start using the new rating system. The system changes the
way the group assesses a charity’s financial health, but it leaves intact the
way it rates a group’s “accountability and transparency,” the second major
performance category. Charity Navigator is one of the more influential charity
assessment organizations, rating about 8,000 charities. Many groups consider
the rating “absolutely critical to attract new resources and donors,” said
Elizabeth Ashbourne, executive director of the Partnership for Quality Medical
Donations, which helps coordinate supplies and equipment for disaster relief
operations. Michael Thatcher, president and chief executive of Charity
Navigator, said website users would still see charities rated on an overall
scale of zero to four stars. “Will the user experience be dramatically different?”
he said. “I don’t think so.” But some underlying measures have been adjusted,
based on a continuing analysis by Charity Navigator’s staff in collaboration
with a task force made up of financial experts from the nonprofit world. The
group also surveyed all the organizations it rates. The new ratings mean donors
“can have even greater confidence in the financial health of the charities they
choose to support,” Mr. Thatcher said. (nytimes.com)

7.After facing 112 fraud and
conspiracy charges in connection with diverting to his own companies $14
million in federal government funds meant for treating the poor and homeless,
Jonathan Dunning left as CEO of Central
Alabama Comprehensive Health in Tuskegee in late 2008 but he still called the
shots at that agency for years. Chief Financial Officer. Teri Mollica has
pleaded guilty to fraud and money laundering charges involving millions of
dollars.

8.The
Citizen of the Year in 2015 is under arrest, facing embezzlement charges.
Oakdale (CA) police was in custody following allegations of embezzlement by the
former former member of the Oakdale Youth Soccer League (OYSL) Board and coach.

9.Move Minneapolis, a nonprofit sponsored by the city of Minneapolis
to promote walking, biking, ridesharing and transit may have been falsifying
accounts and misdirecting funds, according to an audit report made public at
City Hall. The executive director of Move Minneapolis had been placed on unpaid
leave. There were discrepancies
in the payroll records, particularly regarding vacation and sick time and employees
coming in and leaving early.

We flagged these few examples of charity misdeeds:

1.World Ambassadors, Ltd.
$500,000

2.Firefighters Support Services, (MI) <$4.2 million

3.Hunger Free Vermont $165,000

4.Woodbrooke Estates
Home Owners association (NY) $366,000

5.Black Diamond Council
of Girl Scouts (WV) $2300

6.Second African Baptist
Church (SC) $250,000

7.Utility Workers Union of America Local 532 $50,000
to $100,000

8.Salt Lake City
Firefighters Union Local 81 $37,000

9.Hubbard Lake Fire Department (MI)
$60,000

10.Fake Charity (CO) $1 million

11.Clarksville (TN)Salvation
Army unknown

12.Mid-Central EducationalCooperative
(SD) over $1 million

13.Camarillo Fiesta Association (CA) $26,000

14.American Legion Post in Lancaster(PA) $50,000

15.University of Missouri-Columbia $716,000

16.University of Rhode Island Institute for Int’l
Sport $1 million

Political/public official chicanery(just a few):

1.A former Mathison town
marshal has been charged with five counts of felony embezzlement, $75,000,
by a public official.

2.Former
Keeler Township (MI) Fire Chief appeared in court for a preliminary hearing.
Both he and his wife are being charged with one count of embezzlement of more
than $1,000 but less than $20,000 from a nonprofit or charitable organization.

3.City officials have revealed
that Placentia’s (CA) former finance services managerallegedly embezzled nearly $5 million
from the financially fragile city–
about $600,000 more than first believed.

4.A
former city employee in Westbrook (ME) is accused ofstealing
more than $100,000 in taxpayer money over the course of nearly a year.

5.A longtime state
employee has pleaded not guilty to swindling two Arkansas agencies out of more
than $142,000 and giving the money to fake companies.

6.The
former financial director of the Child Abuse Council of Muskegon County has
been arraigned on a felony embezzlement charge.

7.Prosecutors filed embezzlement charges against the former
Beaumont (CA) city manager, finance director and other
officials, alleging that they siphoned as much as $43 million from city
coffers over the past three decades.

8.El
Camino Real Charter High School in Woodland Hills (CA) charged more than
$15,500 at an upscale restaurant to his school-issued American Express card. He
acknowledged charging El Camino for personal travel, also. All amounting to
more than $100,000 to the card.

9.The
former Dexter (MI) schools IT director who stole more than $300,000 from the
district will serve six months in jail and two years probation.

10.A Providence (RI) City
Councilman is accused of embezzling $67,732 in aid from city agencies and city
funds over the past decade.

11.A former City of Petoskey (MI) finance department employee pleaded
guilty to an embezzlement charge in which she admitted to stealing more than
$189,000 from the city during the course of 30 years.

12.An
Oak Park (MI) treasury clerk who authorities say took up to $50,000 from the
city has been charged with embezzlement and counterfeiting.

Nonprofit
Imperativegathers
its information principally from media sources...some of which are directly
quoted. Virtually all cited are in some phase of criminal proceedings; some
have not been charged, however there is money missing. These incidents include
only a fraction of the estimated $40 billion of charity crimes. On rare
occasions, there may be duplicates.

Gary
Snyder is the author of Silence: The Impending Threat to the Charitable
Sector (Xlibris, June, 2011) and Nonprofits: On the Brink
(iUniverse, February, 2006) and articles in numerous publications. The book can
be bought at amazon.com,barnesandnoble.com, Barnes and Noble (store)

About Me

Gary Snyder is the author, most recently, of the groundbreaking expose on the charitable sector, Silence: The Impending Threat to the Charitable Sector as well as the often-cited guide on best practices and key concepts, Nonprofits: On
the Brink.

He is the publisher of a
twice-monthly newsletter, Nonprofit Imperative that gives an update on the current status of the
charitable sector.

Snyder is often quoted and frequent contributor to the blog of the National
Committee for Responsive Philanthropy. Snyder twiceauthored the Governance Chapter of the Michigan
Nonprofit Management Manual (4th and 5th editions).

He is a speaker on ethics,
financial and governance matters of the sector. For almost a decade, Snyder is frequently
consulted by Congress and has been quoted in print, broadcast and online media
outlets.